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UPDATE 3-Volkswagen keeps outlook, warns of energy uncertainty in Europe

UPDATE 3-Volkswagen keeps outlook, warns of energy uncertainty in Europe

Reuters · 07/28/2022 01:34
UPDATE 3-Volkswagen keeps outlook, warns of energy uncertainty in Europe

Q2 adjusted operating profit down 28% to 4.7 bln euros

Q2 revenues up 3.3%

Audi, Porsche lifted profits as Volkswagen brand waned

Adds analyst expectations, profits by brand

By Victoria Waldersee

- Volkswagen VLKAY confirmed its outlook for the year on Thursday as supply chain bottlenecks in items from wire harnesses to chips eased, but it warned the war in Ukraine and threats to European energy supply loomed over the second half.

A steep drop in operating profit to 4.7 billion euros ($4.81 billion) before special items, which the carmaker attributed to effects from commodity hedging transactions, still beat expectations of seven analysts polled by Refinitiv of 4.6 billion euros.

Across the first six months of the year, Volkswagen saw 16.1% growth in operating profit to 13.2 billion euros.

As production problems hampered output in volume segments, premium brands bolstered the carmaker's finances in the first half, with Audi registering a 51% jump in operating profit and Porsche up 22% in contrast to an 8% dip at the Volkswagen brand.

Still, monthly production volumes across the Group improved significantly towards the end of the second quarter, it said, particularly as coronavirus restrictions lifted in China.

"The Group expects the product mix to in the second half of the year as the semiconductor situation improves and the company benefits from a strong order backlog," Chief Financial Officer (CFO) Arno Antlitz said.

Antlitz is due to take on the role of chief operating officer at Volkswagen from Sept. 1, alongside his position as CFO, when a reshuffle at the helm announced last Friday takes effect. That also ousted chief executive Herbert Diess in favour of Oliver Blume, CEO of luxury brand Porsche.

Volkswagen said in April the war in Ukraine could call its full-year outlook into question but has stuck with it since then, expecting sales to rise 8%-13%, an operating profit margin of 7.0%-8.5% and an increase in deliveries of 5-10%.

Sales fell by around a fifth in the first half of the year, with Europe hardest-hit amid supply chain bottlenecks related in part to the war in Ukraine.

"Particularly in Europe, uncertainty exists around energy supply," the carmaker said.

($1 = 0.9781 euros)

(Reporting by Victoria Waldersee; Editing by Rachel More and Jon Boyle)